Financial Tips

Financial Tips

Financial Tips

Test Your Knowledge of Qualified Charitable Distributions
(Updated: 10/09/2017)

A qualified charitable distribution (QCD) is a direct transfer of funds from your IRA to a qualified charity.

True or false?
A QCD can be used to satisfy all or part of your required minimum distribution (RMD), and you won’t have to pay taxes on the amount distributed.




Answer: True.

If all of the requirements are met, a QCD is not a taxable event, meaning you won’t pay taxes on the distribution to a qualified charity, and the amount will be excluded from your income, which could help you avoid moving into a higher tax bracket. In addition, a QCD can satisfy all or part of your RMD for the year. The maximum QCD is $100,000 per taxpayer (not per account), per year.

To be eligible to make a QCD:

  • You must be at least 70½ years old on the date of the distribution (not simply turning 70½ during the tax year when the distribution is made).
  • QCDs must be made from an individual IRA; they cannot come from SEP and SIMPLE IRAs or from any other type of employer retirement plan.
  • The distribution must be for the benefit of a 501(c)(3) organization. Private foundations, support organizations, and donor-advised funds do not qualify.

In order for the QCD to satisfy your RMD for the current tax year, you must make the distribution (and ideally have the check cashed by the charity, completing the donation) by your RMD deadline, which is generally December 31.

For more information about QCDs, see IRS Publication 590-B.





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Fact vs. Fiction

We understand that it can be tricky navigating the world of personal finance. Everyone seems to have an opinion, and it can be hard to know what to believe. We created this series as a way to present and debunk some of the most common financial myths.

Fiction: The difference between whole and universal life insurance policies is minimal.

Fact: Whole life policies pay dividends to the policyowner. These are not dividends in the usual investment sense; they are considered a return of a portion of your annual premium. These dividends can be taken as cash, reinvested, or used to reduce premiums or buy additional insurance. Unlike whole life insurance, universal life policies do not produce dividends. Instead, interest is applied to the policy's cash values without an immediate income tax impact.

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Last Updated: 10/23/2017